Veeva: A Public Benefit Corporation

Background

In February 2021, Veeva became the first public company to convert to Public Benefit Corporation (PBC).

As a PBC, Veeva remains a for-profit corporation but is legally responsible to balance the interests of multiple stakeholders, including customers, employees, partners, and shareholders. It also broadened its certificate of incorporation to include a public benefit purpose, “to help make the industries it serves more productive and create high-quality employment opportunities.”

This charter aligns with our work to deliver technology, data, and services to support life sciences companies in their mission to improve and extend life. With a focus on supporting the industry’s most critical functions from clinical trials through commercialization, we help customers more efficiently and effectively get the right treatments to the right patients.

Long-term View

Converting to a PBC does not change how Veeva operates day-to-day. We have always taken customers, employees, and our communities into account when making decisions. This was a decision for the long-term. It gives customers even greater confidence that our interests are not only well aligned today but will remain that way for decades to come. It also reinforces our values to talented people wanting to join Veeva, reaffirming that it is a place where they can feel good about giving their best.

Leading

Since our founding 14 years ago, we have been charting our own path with a vision that industry-specific cloud software, data, and services could be transformative.

In pursuing that vision, we have been guided by our core values: do the right thing, customer success, employee success, and speed. Yet, our articles of incorporation only legally bound us to maximizing shareholder returns.

The move to align our legal charter with the values that guide how we operate follows our history of leading in areas that will advance the company, the industries we serve, and our stakeholders over the long-term. Our PBC proposal received widespread support from customers, employees, and shareholders. It passed by an overwhelming majority vote with 99% of voting shareholders in favor, including the vast majority of the company’s largest shareholders.

“Veeva’s PBC conversion combined with their annual purpose reporting is leading the way for U.S. public companies to put corporate purpose into action,” said Timothy Youmans, lead-North America, EOS at Federated Hermes. “This is a great example of a public company board aligning stakeholder-inclusive purpose and corporate governance in the interest of long-term value and societal benefit.”

“I’m proud to be part of a company that has a broader purpose and isn’t only about the money,” said Sayaka So, engineering manager at Veeva Systems. “As part of a public benefit corporation, I know my contributions will help make a positive impact in the world.”

Shareholder Letter, Proxy Filing & Press Release

December 4, 2020

Traveler, there is no path. Paths are made by walking.
―Antonio Machado

Dear fellow shareholders,

Since founding Veeva Systems 13 years ago, we have been making our own path. Back then, we had a vision that industry-specific cloud-based solutions for life sciences could be transformative. It has been, and we are still pursuing our vision of building the industry cloud for life sciences, guided by our core values of do the right thing, customer success, employee success, and speed.

There are two proposals in this special proxy. One is significant and unique and the other less so.

First, we propose to undo our classified board so all members of our board of directors stand for election annually beginning in 2021. A declassified board is common practice for mature public companies and we believe it provides a better governance structure for where we are today.

We are also asking for your support to amend our certificate of incorporation to become a Delaware Public Benefit Corporation (PBC). This means we would formally adopt a public benefit purpose and be legally responsible to balance the interests of multiple stakeholders—including our shareholders, customers, employees, partners, and the communities in which we operate—rather than considering only the financial interests of our shareholders.

We believe Veeva should demonstrate leadership and innovation not only in our products and services, but in everything we do. We are proud to be the first large public company in the U.S. to propose a PBC conversion to its shareholders.

Why us and why now? As we have grown and as our customer relationships have deepened, we have become increasingly important to the life sciences industry’s ability to improve health and extend lives. Looking ahead, Veeva has the potential to become essential to the process of developing medicines and cures and bringing them to patients. Society’s interest in the success and sustainability of this process is clear. Our vision is not sustainable over the long term if it is only about financial returns.

We have also always believed that our deep commitment to customers, employees, and our core value of ‘do the right thing’ enhances our ability to create shareholder value. I outlined these operating principles in my 2013 Founders Letter included with our IPO registration statement. A PBC conversion is a way to align our certificate of incorporation to the values-based way we operate the company. It makes clear to customers that our purposes will remain aligned. And it also demonstrates to our employees and candidates that Veeva is a place where they can feel good about giving their best.

As Veeva’s founder and largest shareholder I have a personal and reputational interest in focusing on how we operate as well as on how well we operate. Our board of directors and I believe that a PBC conversion will enhance our long-term financial sustainability and our ability to create value for shareholders. We ask for your vote to create this new path.

Sincerely,


Peter P. Gassner
Chief Executive Officer and Director


(Excerpt, full proxy here)

As a PBC, Veeva would adopt the following public benefit purpose:

Public Benefit Purpose. The specific public benefits to be promoted by the corporation are to provide products and services that are intended to help make the industries we serve more productive, and to create high-quality employment opportunities in the communities in which we operate.

As a PBC, Veeva would adopt the following obligation to balance the interest of stakeholders:

The Corporation shall be a public benefit corporation, as contemplated by subchapter XV of the DGCL, and is to be managed in a manner that balances our stockholders’ pecuniary (financial) interests, the best interests of those materially affected by the corporation’s conduct (including customers, employees, partners, and the communities in which we operate), and the public benefits identified in this certificate of incorporation. We believe this corporate structure reflects our guiding principle, “do the right thing.”

Why Converting to a PBC is Right for Veeva and Shareholders

PBC conversion better aligns our legal responsibilities to our core values — do the right thing, customer success, employee success, and speed — and our approach to decision making. More specifically, we believe that becoming a PBC is valuable for our customers and employees, does not diminish the rights of our investors, may benefit our relationships with other key groups, and can be beneficial to our long-term financial performance. We believe that these factors accrue to shareholder value creation. We will start with our customers.

Our customers. The broad goal of the principal industry we serve — life sciences — is to improve health and extend lives. Helping the life sciences industry be more productive in pursuit of that goal is a natural public benefit that has never been more important.

As our product and service offerings have expanded, Veeva has become a trusted technology partner for the most important functions of life sciences companies, including clinical trial management, regulatory submissions, pharmacovigilance (drug safety), manufacturing quality processes, data, and communications between life sciences companies and doctors. As our customers increasingly rely on us to help them get the right treatments to patients more efficiently and effectively, we have become operationally significant to our customers and also a meaningful part of the healthcare ecosystem that is critical to society.

Long-term purpose alignment with our customers and the industry we serve is important as we ask our customers to make even deeper commitments to Veeva for technology systems they may use for decades. We believe our proposed public benefit purpose (and our PBC commitment to consider the interest of customer stakeholders) solidifies this alignment and can give our customers increased confidence to invest in Veeva’s technology solutions, which has the potential to make our revenue base more durable and enhance our ability to invest in innovation for our customers. We believe these customer benefits translate to better shareholder returns over the long term.

Our employees. We also believe that our proposed public benefit purpose will help us attract and retain the best employees—diverse employees who value giving their best to a company whose purpose matters. We are already a company that has created thousands of relatively high-paying jobs, with good benefits in an industry with few environmental risks and many social benefits. We are also a company that is intellectually and professionally challenging, that invests in employees and supports their development and mobility (including never imposing non-compete obligations as a condition of employment), that seeks to reduce bias, increase inclusion and that supports employee-driven charitable priorities.

Our position on many of these issues is reflected in our statement on corporate citizenship that is posted on our website, and we expect our disclosures on these and similar employee-related topics will expand as a PBC. We believe our PBC purpose (and our PBC commitment to consider the interest of employee stakeholders) will enhance relationships with the best employees and job candidates, thus enabling us to better support our customers and drive results for investors.

The rights of our investors. Upon conversion to a PBC, our shareholders will continue to have all of the protections and governance rights that shareholders of traditional companies have, including rights to elect the Board, file shareholder proposals, pursue fiduciary duty litigation, and vote on major corporate transactions like charter amendments and mergers, as well as to tender their shares in connection with a hostile takeover structured as a tender offer. Our Board also considered that if Veeva were to convert to a PBC, only shareholders that own at least the lesser of (i) 2% of the voting power of Veeva’s outstanding shares or (ii) $2 million worth of outstanding shares could file a lawsuit alleging we breached our fiduciary duty to balance the financial interests of shareholders, the interests of other stakeholders, and pursuit of our public benefit purpose. In addition, Delaware’s longstanding “business judgment rule” should apply to balancing determinations so long as directors remain informed and free of conflicts of interests.

Sustainability-Focused Investors. When we engaged with shareholders prior to deciding whether to propose the PBC conversion, we were encouraged by the number of investors that are focused on corporate sustainability. Our Board is particularly heartened by the rapid growth in investment funds that look to invest in responsibly run companies who combine creating value for shareholders with helping to further a public benefit. Becoming a PBC can serve as evidence of our shared commitment to long-term responsible performance and may make Veeva a more attractive investment to this rapidly growing category of investors.

Regulators. Regulators play an important role in the businesses of our customers. Our products and services often help our customers maintain regulatory compliance and be more responsive to regulators. We believe that having a legally formalized public benefit purpose may be helpful in any interactions we have with regulators on behalf of our customers or on our own behalf. For example, in July 2020, in response to COVID-19 challenges, the U.S. Department of Health and Human Services (“HHS”) issued a memorandum recommending the Veeva SiteVault Platform, among others, as a means to continue remote monitoring programs of AIDS-related clinical trials. The memorandum noted that our Veeva SiteVault solution can be used free of charge. We believe that the mission alignment expressed in our proposed public benefit purpose and the increased flexibility to address unexpected events as a PBC can enhance our reputation and the reputation of our products with the HHS (including the U.S. Food and Drug Administration) and other regulators, as our decision to offer a free remote monitoring solution for under-resourced clinical trial sites did in 2020. We also believe these reputational benefits can lead to increased confidence and adoption of our fee-based products over time, which accrues to the financial benefit of shareholders.

Our financial results. We do not expect conversion to a PBC to impact any of our existing financial targets, and our Board believes that a PBC conversion has the potential to be beneficial to our long-term financial results. We see social and economic benefits as complementary and have always operated with the long-term view that doing the right thing for our customers, employees, partners, and communities ultimately allows us to deliver the best results for shareholders. It is worth noting that an increasing number of large investors share our view that a sense of purpose and commitment to stakeholders is key to long-term financial performance.

Our reputation. We believe our conversion to a PBC, if executed well, has the potential to enhance our reputation as an honorable and long-term focused company. This is in part because we believe that as a PBC we can attract employees who care about purpose, values, and customer success and who will therefore act to make us a company worthy of admiration.

Other considerations. Status as either a traditional Delaware corporation or as a PBC is no guarantee of future performance. While we believe that conversion to a PBC is in the best interests of our shareholders and will have many positive benefits as described above, it could potentially have negative effects on our company. For example, if a shareholder meets the applicable thresholds described above, it could file a lawsuit alleging we breached our fiduciary duty to balance the financial interests of shareholders, the interests of other stakeholders, and pursuit of our public benefit purpose, and any such lawsuit could be costly and time consuming to defend. We also expect modest additional expenses and headcount requirements relating to PBC reporting. If, however, the DGCL is amended in the future to require more explicit or onerous periodic reporting requirements of PBCs, it could further increase our costs of remaining a PBC. In addition, if the public perceives that we are not successful in our public benefit purpose, or that our pursuit of our public benefit purpose is having a negative effect on the financial interests of our shareholders, that perception could negatively affect our reputation, which could adversely affect our business and results of operations.

Our View on Veeva’s PBC Balancing Obligation

Throughout Veeva’s history, we have considered the interests of our customers, employees, partners, and the communities in which we operate as we have deliberated over what was in the best interests of our shareholders. We believe that most, if not all, companies that have achieved meaningful success and maintained market leadership over longer periods must, in various ways, prioritize the needs of their various stakeholders along with their shareholders. It is, we believe, a false dichotomy to suggest otherwise. Further, we do not believe that balancing the interests of all stakeholders will require us to take actions that do not maximize shareholder value over the long term.

As a PBC, we would still have a fiduciary duty to shareholders. And while our stated public benefit purpose must have a positive effect on non-shareholders, it may also benefit shareholders. We believe our proposed public benefit purpose does. Our obligation would be to balance the financial interests of shareholders with the best interests of those materially affected by our conduct and the public benefit purpose we have proposed. It is hard to envision a circumstance in which those interests would not be aligned over the long term. Shareholders benefit over the long term when employees are engaged and happy and when customers are more productive. In the primary industry we serve—life sciences—a more productive customer may also mean better outcomes for patients and society as a whole when, for instance, a clinical trial can be started more quickly and administered more efficiently using our technology solutions. These benefits for our customers would naturally result in financial benefits for Veeva and its shareholders. It is our Board’s belief that it is appropriate to memorialize our commitment to consider the interests of multiple stakeholders as an essential part of our effort to create long-term, sustainable value for shareholders and, if done well, a societal benefit as well.


Aligns legal charter with company’s long-term view and commitment to all stakeholders, including customers, employees, and shareholders

Proposal passes by landslide as Veeva garners widespread support for leading in stakeholder capitalism

PLEASANTON, CA — Jan. 13, 2021 — Veeva Systems (NYSE: VEEV) announced that in an overwhelming majority vote today, 99% of voting shareholders support the company’s proposal to become a public benefit corporation (PBC), including the vast majority of Veeva’s largest shareholders. With today’s shareholder approval, Veeva will become a public benefit corporation on Feb. 1, 2021, making it the first publicly traded company and largest-ever to convert to a PBC.

As a PBC, Veeva will remain a for-profit corporation but will be legally responsible to balance the interests of multiple stakeholders, including customers, employees, partners, and shareholders. It will also broaden its certificate of incorporation to include a public benefit purpose, ‘to help make the industries it serves more productive and create high-quality employment opportunities.’

A key technology partner to the life sciences industry, Veeva is dedicated to customers’ mission to advance human health and wellbeing. This move aligns Veeva’s legal charter with this broader mission and the company’s core values, including do the right thing, customer success, and employee success.

“We’ve always operated in the best interests of our customers, employees, communities, and shareholders,” said Peter Gassner, founder and CEO of Veeva Systems. “We’re excited to take the important step to put this in our legal charter so we can ensure Veeva’s accountability to all stakeholders continues for decades to come.”

Veeva’s proposal to declassify its board of directors also received near unanimous approval by shareholders today.

What Veeva Stakeholders are Saying:

“Veeva has been a partner for many years and is deeply committed to Dicerna's success and our mission to develop innovative treatments for patients in need,” said Rob Ciappenelli, chief commercial officer at Dicerna Pharmaceuticals, Inc. “We look forward to delivering innovative solutions to patient communities with Veeva’s continued support.”

“I’m proud to be part of a company that has a broader purpose and isn’t only about the money,” said Sayaka So, engineering manager at Veeva Systems. “As part of a public benefit corporation, I know my contributions will help make a positive impact in the world.”

“Veeva’s PBC conversion combined with their annual purpose reporting is leading the way for U.S. public companies to put corporate purpose into action,” said Timothy Youmans, lead-North America, EOS at Federated Hermes. “This is a great example of a public company board aligning stakeholder-inclusive purpose and corporate governance in the interest of long-term value and societal benefit.”

Additional Information
Connect with Veeva on LinkedIn: linkedin.com/company/veeva-systems
Follow @veevasystems on Twitter: twitter.com/veevasystems

About Veeva Systems
Veeva Systems Inc. is the leader in cloud-based software for the global life sciences industry. Committed to innovation, product excellence, and customer success, Veeva serves more than 950 customers, ranging from the world’s largest pharmaceutical companies to emerging biotechs. Veeva is headquartered in the San Francisco Bay Area, with offices throughout North America, Europe, Asia, and Latin America. For more information, visit veeva.com.

Forward-looking Statements
This release contains forward-looking statements, including the market demand for and acceptance of Veeva’s products and services, the results from use of Veeva’s products and services, and general business conditions (including the on-going impact of COVID-19), particularly within the life sciences industry. Any forward-looking statements contained in this press release are based upon Veeva’s historical performance and its current plans, estimates, and expectations, and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Veeva’s expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Veeva disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Additional risks and uncertainties that could affect Veeva’s financial results are included under the captions, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the company’s filing on Form 10-Q for the period ended October 31, 2020. This is available on the company’s website at veeva.com under the Investors section and on the SEC’s website at sec.gov. Further information on potential risks that could affect actual results will be included in other filings Veeva makes with the SEC from time to time.

###

Contact:

Roger Villareal
Veeva Systems
925-264-8885
roger.villareal@veeva.com

Deivis Mercado
Veeva Systems
925-226-8821
deivis.mercado@veeva.com



Frequently Asked Questions

A public benefit corporation (PBC) is a for-profit company. There are two primary distinctions between a PBC and a traditional corporation (known as a C corporation).

First, PBCs adopt a public benefit purpose in their certificates of incorporation. Veeva’s public benefit purpose is to help make the industries it serves more productive and create high-quality employment opportunities. This public benefit purpose aligns with the Veeva’s focus on helping life sciences companies in their mission to improve and extend life.

Second, in making decisions, PBCs have a fiduciary duty to balance the interests of shareholders, the interests of stakeholders materially affected by the PBC’s conduct, and pursuit of the PBC’s public benefit purpose. For Veeva, this means taking into account the impact our decisions and operations have on shareholders, employees, customers, partners, and the communities in which we operate. In our view, this approach enhances the long-term value of Veeva and is in the best interests of shareholders and all our other stakeholders.


We see social and economic benefits as complementary and have always operated with the long-term view that doing the right thing for our customers, employees, and communities ultimately allows us to deliver the best results for investors.

Having a charter that reflects that we do consider customers, in addition to shareholders, when making decisions can give customers and the industries we serve even greater confidence our interests are not only aligned today, but that they will remain that way well into the future. We also believe that the best people want to work for a company that is purpose driven and the move to PBC can help us recruit and retain the best talent.

Therefore, we believe that PBC conversion can positively impact our long-term financial results.


Veeva is the first publicly listed company to convert from a traditional C corporation to a PBC. Laureate Education, Lemonade, and Vital Farms went public in an initial public offering (IPO) as PBCs.

Many well-known private companies and subsidiaries of some large public companies are also benefit corporations, such as Danone North America, Patagonia, King Arthur Baking Company, Ben & Jerry’s (a subsidiary of Unilever, Inc.), Allbirds, and Method Products (a subsidiary of S.C. Johnson & Son, Inc.).


B Corp Certification is a third-party certification administered by the non-profit called B Lab. PBCs are a form of legal entity and do not have to be certified by any non-government entity. Some PBCs and traditional corporations choose to pursue B Lab’s private certification process. This type of certification is not a PBC requirement.


Resources

 
Veeva CEO on Becoming a PBC